Windows Phone sales down by half compared to a year ago

In short, Microsoft has found some firm footing in the competitive cloud computing market. It is a move that looks to be paying off, at least in the eyes of investors.

Analysts polled by Thomson Reuters had expected adjusted per-share profit of 71 cents and revenue of $US25.26 billion.

On the flip side, Microsoft’s phone division is tanking.

“We expect our commercial business to remain healthy, with an ongoing shift to annuity as new and existing customers adopt and use our commercial cloud services”, said Microsoft chief financial officer Amy Hood.

Microsoft also reported that revenues from More Personal Computing declined 5pc to $12.7bn.

The goal is to get people using Microsoft’s latest products, no matter what kind of device they prefer, said Frank Gillett, a tech analyst with Forrester Research. IBM and Google are next.

Intelligent Cloud (IC), which includes service revenue and Enterprise Services: $6.4 billion compared to $5.9 billion in the last quarter. Although it collects all the cash up front from selling the software to PC makers and others, accounting rules dictate that the company has to spread its recognition of the money over the life of the product.

Those peaks and valleys include growth in its cloud business, varied results on the productivity and business processes business, and declines in the unit that includes Windows OEM revenues and devices in its second-quarter results, the company reported Thursday. Microsoft and Nokia have sold a total of 110 million Windows Phones compared to 4.5 billion iOS and Android phones in the same period.

The cloud outshone all other areas of the business.

Overall though, Microsoft’s revenue declined by 10 percent year-over-year to just $23.8 billion for the quarter, which makes it all the more important that the company to sustain its cloud growth.

Office 365, the company’s subscription-based productivity service also saw a revenue growth of 70%, with subscribers increasing to more than 20 million. That rebound has not materialized.

Microsoft Corporation (NASDAQ:MSFT) stock rose 4.22% after hours yesterday, as it posted earnings beats in its Q2 results. Conversely Windows Phone revenue dived dramatically, it was cut in half in constant currency, apparently following Microsoft’s cunning plans and “reflecting our strategy change announced in July 2015”. The Surface is now driving Microsoft’s hardware sales forward, and the company is really keen on improving the device with significant upgrades likely to come later this year.